When would I need a Letter of Intent?

Companies use LICS for business negotiation in anticipation of a future agreement. Prior to an official deal, they can take their time affirming to the terms satisfactory to all. There are several types of business LICS. Most commonly, it is used to signal an intention to purchase a real property, a business, a vehicle, and the like. You can even use a LIC to show interest in working for a particular company. Students can use a Letter of Intent to formally accept a scholarship offer and student-athletes would do the same to show a commitment to accept a sports scholarship offer from a university – where top-ranked high school athletes in the major sports often make the news after signing a LIC.

What happens if businesses that are considering a deal neglect to use a Letter of Intent?

Although the LIC is not a requirement, it can give both parties confidence that this is a serious deal in the works, where a LIC can be used as a guideline for the agreement that is to happen in the future. In the meantime, you can inspect the LIC for any terms that you might want to change or negotiate before arriving at the definitive agreement. Banks might also demand to see a LIC before authorizing to finance the business deal made.

Is a Partnership Letter of Intent Legally Binding?

Generally, no. The deal terms inside a Partnership LOI, such as the proposed profit split or closing date, are typically not enforceable on their own. However, specific sections are often written to be binding even though the rest of the document is not. Confidentiality clauses and exclusivity periods are common examples of provisions partners intend to enforce regardless of whether the partnership itself ever forms. Because this can vary based on how the document is worded and your state's laws, it is worth clearly labeling which sections are binding before everyone signs.

What to Do With Your Partnership Letter of Intent?

Once signed, distribute a copy to every partner so everyone has a record of the proposed terms. There is generally no requirement to file a Partnership LOI with any state agency or government office. Keep your signed Partnership LOI on hand as you negotiate. Many partners use it as the outline for their definitive Partnership Agreement, checking each proposed term against the final document before anyone signs. If your terms change after the partnership is already in place, you can later create a Partnership Agreement Amendment to update it.

Should a Partnership Letter of Intent Be Notarized?

Typically, no. Notarization is generally not required for a Partnership LOI, since the document is not designed to be legally binding on its own. If your Partnership LOI includes sections you want to be enforceable, such as confidentiality or exclusivity, check your state's requirements to see whether any additional formalities apply to those specific sections.

What Happens After You Sign a Partnership Letter of Intent?

After signing, each partner should keep a copy of the Partnership LOI for their records. The parties then typically move into deeper negotiations, due diligence, and drafting of the definitive Partnership Agreement. If the partnership does not move forward, a Partnership LOI generally has no further effect, aside from any sections the parties agreed would remain binding, such as confidentiality.

Partnership Letter of Intent Template

Q: What Is the Difference Between a Partnership Letter of Intent and a Partnership Agreement?

A Partnership Letter of Intent outlines proposed terms while partners are still negotiating, and it is generally non-binding. A Partnership Agreement is the document that actually forms the partnership, and it is typically a legally binding agreement once every partner signs it. Most partners draft the Partnership LOI first to confirm they agree on the basics, then move on to a full Partnership Agreement covering the legal details.

Key Takeaways - A Partnership Letter of Intent (LOI) is a written, generally non-binding document that outlines the proposed terms of a business partnership before the partners sign a definitive Partnership Agreement. - It is not the same as a Partnership Agreement: an LOI maps out proposed terms while partners are still negotiating, while a Partnership Agreement is the document that actually creates and governs the partnership. - A typical Partnership LOI covers the partnership's purpose, each partner's contributions, the proposed profit and loss split, governance, and a target date for finalizing the deal. - Even though the overall deal terms are generally non-binding, specific sections, such as confidentiality or an exclusivity period, are often written to be enforceable on their own. - Notarization is typically not required for a Partnership LOI, since the document is not designed to be legally binding by itself. - 360 Legal Forms helps you build a Partnership Letter of Intent for your state through a guided questionnaire, with instant Word and PDF downloads.

A Partnership Letter of Intent (LOI) is a written document that outlines the proposed terms of a business partnership before the partners sign a definitive Partnership Agreement. Whether you are launching a new venture with a friend, merging two existing businesses, or putting a verbal deal with an investor into writing, a Partnership LOI gives everyone a shared reference point while the details are still being negotiated.

360 Legal Forms helps you build one through a short, guided questionnaire, with your finished document ready to download as a Word or PDF file.

What Is a Partnership Letter of Intent?

Suppose two people or businesses want to explore working together, whether that means launching a new venture, merging operations, or bringing on an investor. Before drafting a full Partnership Agreement, they can sign a Partnership LOI to put their shared understanding in writing.

A Partnership LOI typically covers the purpose of the partnership, what each partner plans to contribute, and how profits and decision-making will generally work. It also sets a rough timeline for finalizing a definitive Partnership Agreement. Most Partnership LOIs are written with a general partnership in mind, though the same structure can be adapted for other partnership types.

In most cases, a Partnership LOI is not meant to replace that definitive agreement. It is a roadmap that helps both sides confirm they are aligned before investing more time, money, or trust into the deal.

Start your Partnership Letter of Intent above to put your terms in writing today.

Partnership LOI vs. Partnership Agreement: The Key Distinction

The biggest point of confusion is whether a Partnership LOI and a Partnership Agreement are the same document. They are not. A Partnership LOI records proposed terms while partners are still negotiating, and it is generally non-binding.

A Partnership Agreement, by contrast, is the document that actually forms the partnership, and it is typically a legally binding agreement once every partner signs it. Most partners draft the Partnership LOI first, then use it as the basis for the definitive Partnership Agreement that follows.

Other Names for a Partnership Letter of Intent

Depending on the parties involved, a Partnership Letter of Intent may also be called:

Partnership Term Sheet

Partnership Proposal Letter

Partnership Memorandum of Understanding (MOU)

Letter of Interest

A Partnership LOI is also sometimes confused with a joint venture agreement. Courts generally treat a partnership as an ongoing business relationship, while a joint venture usually covers a single project or transaction. 360 Legal Forms will help you generate the version that fits your situation, customized for your state.

Who Needs a Partnership Letter of Intent?

A Partnership Letter of Intent can be useful any time two or more people or businesses are seriously discussing a partnership but are not ready to sign a definitive agreement. Common situations include:

- Two individuals or small business owners planning to launch a new business together.

- An existing business bringing on a new partner or investor.

- Two companies discussing a merger or a shared venture before finalizing the legal structure.

- A franchise, agency, or referral relationship the parties want to formalize as a partnership.

A Partnership LOI is generally optional. According to the U.S. Small Business Administration, partnership agreements themselves are not legally required, though they are strongly recommended before two or more people go into business together. Skipping a written document of any kind, including an LOI, can leave the partnership's terms unresolved if a disagreement comes up later.

If you are buying into an existing partnership rather than forming a new one, our Assignment of Partnership Interest form may be a better fit.

Answer a few questions below to start your Partnership Letter of Intent.

What Does a Partnership Letter of Intent Include?

A Partnership Letter of Intent generally includes the following information:

Field	Details	Why It Matters
Partner Information	Legal names, business addresses, and contact details for each prospective partner	Confirms exactly who is negotiating and how to reach them
Partnership Purpose	The business activity, goal, or venture the partnership intends to pursue	Keeps both sides aligned on what the partnership is actually for
Contributions	What each partner plans to provide, such as capital, property, equipment, or expertise	Helps prevent disputes over who put in what later on
Profit and Loss Split	The proposed percentage or formula for sharing profits and losses	Sets expectations before the definitive agreement is drafted
Governance	How key decisions will generally be made while finalizing the deal	Reduces confusion about who has a say in what
Confidentiality	A promise to keep shared financial or business information private	Protects sensitive details exchanged during negotiations
Exclusivity Period	How long, if at all, the parties agree to negotiate only with each other	Prevents one side from shopping the deal elsewhere mid-negotiation
Target Closing Date	The date the parties hope to sign a definitive Partnership Agreement by	Keeps negotiations moving toward an actual agreement
Binding Provisions	Which sections, if any, are intended to be enforceable on their own	Clarifies what each party can and cannot walk away from
Governing Law	The state whose law would apply if a dispute over the LOI arises	Determines which rules apply if something goes wrong

Have these details ready? Build your Partnership Letter of Intent below.

How to Fill Out a Partnership Letter of Intent (Step by Step)

Follow these steps to fill out your Partnership Letter of Intent from start to finish.

1. Identify Every Prospective Partner

List the legal name, business address, and contact information for each individual or company entering the discussion. Note their state of organization if a partner is already a registered business.

2. State the Purpose of the Partnership

In a sentence or two, describe what the partnership is meant to accomplish, such as launching a product, combining two client bases, or sharing a physical location.

3. Describe Each Partner's Contributions

List what each partner plans to contribute, whether that is cash, property, equipment, or hands-on labor and expertise.

4. Propose a Profit and Loss Split

Outline how profits and losses will generally be divided. Many partners start with an even split and adjust from there based on contributions.

5. Address Governance and Decision-Making

Note how the partners will generally make decisions while negotiations continue, such as requiring agreement from all partners on major choices.

6. Add a Confidentiality Clause

State that both sides agree to keep shared financial records, business plans, and other private details confidential during negotiations.

7. Decide on an Exclusivity Period

If you want to prevent either side from negotiating with other prospective partners for a period of time, state how long that exclusivity period will last.

8. Set a Target Closing Date

Add a date by which the partners hope to sign a definitive Partnership Agreement. This keeps the negotiation moving instead of stalling indefinitely.

9. Clarify Which Sections Are Binding

State clearly which sections, if any, are meant to be enforceable, such as confidentiality or exclusivity, and which sections are only proposed terms.

10. Review, Sign, and Distribute Copies

Read through the finished Partnership Letter of Intent with all partners, sign it, and give each partner a copy. Notarization is typically not required, though you should check your state's requirements if you are unsure.

Ready to build yours? Start your Partnership Letter of Intent below.

How to Create a Partnership Letter of Intent with 360 Legal Forms

Drafting a Partnership Letter of Intent from scratch means making sure you have not missed an important section. 360 Legal Forms removes that guesswork with a guided questionnaire built around partnership-specific terms.

Select your state, answer the questionnaire's straightforward questions about your proposed partnership, and review your finished document. Once you are satisfied, download it as a Word or PDF file, or invite the other partners to review and sign online with built-in e-signature.

What Information Will I Need to Create My Partnership Letter of Intent?

To complete your document, have the following ready:

- The legal names, addresses, and contact details for each prospective partner.

- A short description of the partnership's purpose.

- Each partner's planned contributions, such as capital, property, or expertise.

- Your proposed profit and loss split.

- A target date for signing a definitive Partnership Agreement.

- Any confidentiality or exclusivity terms you want included.

Partnership Letter of Intent Terms

Here are a few terms you may come across while completing your Partnership Letter of Intent:

Definitive Agreement: The formal Partnership Agreement signed after negotiations are complete, typically legally binding.

Capital Contribution: Money, property, or other assets a partner provides to the business.

Exclusivity Period: A window of time in which the partners agree to negotiate only with each other.

Confidentiality Clause: A promise to keep shared business or financial details private during negotiations. If you need a standalone version of this protection, see our Confidentiality Agreement form.

Binding Provision: A specific section of an otherwise non-binding Partnership LOI that is intended to be enforceable.

Governing Law: The state law that would apply if a dispute over the Partnership LOI itself arises.

Good Faith Negotiation: Negotiating honestly, with a genuine intention to reach a definitive agreement.

Partnership Letter of Intent Signing Requirements

All prospective partners, or an authorized representative of each business entity involved, should sign the Partnership LOI. Witnesses and notarization are typically not required, since the document is generally not designed to be binding on its own. In many states, the parties can sign with a handwritten signature or with a secure e-signature.

Build your Partnership Letter of Intent below in a few minutes.

Conclusion

A Partnership Letter of Intent will not replace your definitive Partnership Agreement, but it gives every partner a clear, written starting point before time, money, or trust is on the line. Putting your proposed terms in writing now can help prevent the kind of disputes that come up when partners remember a handshake deal differently months later.

360 Legal Forms makes it straightforward to build a Partnership Letter of Intent for your state, then download it as a Word or PDF document once you are ready to move forward. Browse our full library of legal documents or our business documents if you need something else for your partnership down the road. Create your Partnership Letter of Intent above and head into negotiations with your terms already on paper.

Bibliography

U.S. Small Business Administration, Choose a Business Structure: Partnership.

Note: 360 Legal Forms is not a law firm and does not provide legal advice. The information on this page is for general informational purposes only. Consult a licensed attorney for advice specific to your situation.

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